James Davolos Predictions

[3:07] Prairie Sky did very well up 52%. Still like it here. >> Yeah. Like it a lot. I mean 20 million plus acres in the western Canadian sedimentary basin with just huge long-term optionality run by a really astute management team. Lot of interesting things going on now with different technologies extracting oil and gas. And we're actually starting to see some more visibility around kind of LNG in Canada. So again, 5 10 year outlook. Love the company.

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[10:48] So if you underwrite that business, I think that you're getting the exchange for probably a low at worst fair valuation here. But then there's all of these different call options... So we again look at this as a primary beneficiary of to your point earlier Amber the get-richqu where people want to own these options there's zero day to expiration where it's a single day or a single week to expiry and all of that is really acrewing to bex and they've done a really good job of product innovation and marketplacing to make sure that they're going to be one of the primary beneficiaries of this trend.

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[14:40] So as you can see if you do agree with a thesis of there being long secular market here I think just from the existing corpus of the business which you're paying about 13 to 15 times forward ebata on uh you're going to do fine if not great and again revert back to the business model quality matters um this high of a margin no leverage and the kind of the flywheel around every incremental dollar of invest flows essentially flows down to adjusted IBIDA that allows you to express a view much longer term

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[19:53] I think that business in and of itself is extremely interesting. um it's probably going to grow about 25% a year for the next 2 to 3 years uh at a 90% EBIDA margin and then they're converting about 70% of that into free cash flow.

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[2:35] we still really like the water business and think that there's a decade plus of growth both in price and volume.

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[5:24] I think that we're early in what's going to be a very long, protracted cycle here, and you know, as always, the pattern of these returns is never going to be smooth and linear.

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[7:18] in this type of environment, if we think the true rate of inflation is going to be skewing more 3 to 5 versus the more historical, at least targeted benchmark of two, I think that you should be looking at a minimum hurdle bench rate benchmark rate of return of around 10% in these assets.

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[17:34] I think over the long term, absolutely. Short term, clearly there's something funky going on in the funding market and with correlations and who knows with algorithms and momentum trading. So, but yes.

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[26:33] We do. We think kind of you there's a lot of different frameworks to look at Bitcoin. You can kind of look at the hash rate and the mining economics and the halving cycle, the stock to flow, but I think all of the reasons that you want to own real-world assets also has a very similar thesis that applies to blockchain and Bitcoin.

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[31:51] I like silver a lot. Some people describe it as the higher beta version of gold, but it is hard to see a world where you're constructive on gold and silver doesn't participate because it's a much narrower, less liquid market. So, when there is a buying impulse, you see much larger moves

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[34:41] I think owning it through a royalty gives you that flexibility to extend your time horizon and really kind of look out and say, well, there's a lot of non-producing assets here and so, as those become economic, whether it's at 50, 60, 70, 80 dollar an ounce, ultimately, that's almost a free call option to you as a shareholder.

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[38:47] I think with the appropriate time horizon, but also understanding that there's going to be some volatility around coal and some ambiguity over when and how and at what price the coal assets will trade at, I think it's a very interesting special situation set up, and the price is kind of at a point where it's really difficult to ignore.

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[12:37] particularly with a changing at the Federal Reserve in the United States here with Kevin Warsh coming in, he's actually been fairly explicit that he's looking to redefine exactly what inflation is and redefine a lot of these parameters which ultimately, and I might be getting ahead of myself here, I think it's kind of a way to push through more of this nominal growth visa vis inflation transmission mechanism without necessarily having to explain for it and perhaps having a um cover to maybe be a little bit more dovish whether it's with rates or the Fed balance sheet.

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